Gold Falls for Second Day on Fed Stimulus Stance

April 4 (Bloomberg) -- Gold fell to a 12-week low on signs
that the Federal Reserve won’t provide more U.S. economic
stimulus, boosting the dollar and eroding the appeal of precious
metals as alternative investments. Silver tumbled 6.7 percent.

The Fed will hold off on increasing monetary accommodation
unless economic expansion falters, according to minutes of a
March 13 policy meeting released yesterday. The dollar rose to a
one-week high against a basket of six major currencies, and the
euro slumped on Spain’s debt woes.

“The market has decided that yesterday’s statement is
probably the final nail in the coffin” for additional Fed
stimulus, Frank Lesh, a trader at FuturePath Trading in Chicago,
said in a telephone interview. “Gold is reacting to the
strength in the dollar.”

Gold futures for June delivery fell 3.5 percent to settle
at $1,614.10 an ounce at 1:35 p.m. on the Comex in New York, the
biggest drop for a most-active contract since Feb. 29. Earlier,
the metal touched $1,613, the lowest since Jan. 10.

On Feb. 29, gold plunged as much as $100 after Fed Chairman
Ben S. Bernanke, testifying before Congress, gave no signal that
the central bank would take new steps on monetary stimulus.

Gold has surged 83 percent since the end of 2008 as the Fed
held borrowing costs at a record low and bought $2.3 trillion in
housing and government debt.

Silver Tumbles

Silver posted the biggest decline among 24 raw materials in
the Standard & Poor’s GSCI Spot Index. Nickel, copper and lead
also slumped.

“The move is more pronounced in silver as people look at
silver both as an industrial metal as well as a precious
metal,” Gijsbert Groenewegen, a partner at Silver Arrow Capital
Management in New York, said in a telephone interview.

Silver futures for May delivery plunged $2.221 to $31.044
an ounce on the Comex. Earlier, the metal touched $30.98, the
lowest since Jan. 20. The percentage drop was the biggest since
Feb. 29.

On the New York Mercantile Exchange, platinum futures for
July delivery dropped 3.7 percent to $1,598.60 an ounce, the
biggest drop since Dec. 14. Earlier, the price touched $1,598,
the lowest since Feb. 1.

Palladium futures for June delivery fell 4.1 percent to
$632.75 an ounce on the Nymex. Earlier, the metal touched
$630.75, the lowest since Jan. 13.